Blue Ocean Strategy – Competing by not competing
According to two authors W.Chan Kim and Renée Mauborgne of the book ""Blue Ocean Strategy. How to create uncontested Market Space And Make Competition Irrelevant. - Blue ocean Strategy. How to create an empty and uncompetitive market” – ranked top in business strategy in 2005 – businesses traditionally design their business strategies, often placing themselves in a competitive market. In this business environment, companies must compete strongly with each other and prevail over their opponents. Intense competition can lead to market loss, growth, and profits. Instead of that "bloodshed", the authors suggest that to be successful, businesses should create a blue ocean strategy for their company, where there are no competitors and competition.
This may seem fanciful to businessmen, but think about it: a century ago, the business sectors: cars, aviation, petrochemicals... were completely non-existent. 30 years ago, these industries did not exist. Money-making businesses such as mobile phones and biochemistry were unknown. There will always be some industries that are born and grow strongly, the problem is who will find them first.
Blue ocean strategy is not only about creating a new business, a new market, but also about creating a new market with high profits. For example, SouthWest Airlines - USA created a new ocean - a market for cheap air travel, Yellow Tail, an Australian wine company created a wine market for Americans who previously did not drink wine. , but drinking beer and cocktails, Samsung alone in the market with LCD TVs... According to the authors, every company, regardless of size, history, budget, geographical location, can create Innovations have value and more importantly, these innovations must be recognized and used by customers.
Blue Ocean Strategy, there is no debate anymore, is a good business strategy that businesses should research and implement, especially in the era of businesses. The question the writer wants to pose here is: Do other top managers see this blue ocean strategy?
Blue Ocean Strategy from the perspective of Philip Kotler - "The Father" of modern Marketing:
According to Philip Kotler, businesses have the following competitive strategy options:
Market-Leader strategy: This is the strategy of a leader in the business industry by capturing the majority of market share, leading the market in changing product prices, introducing new products, and controlling the distribution system. coordinate.
Maker-Challenger Strategy: This is the business's strategy to challenge the leading position. Challenges, as their name suggests, have the most important goal of overthrowing or at least approaching the position of the leading enterprise.
Market- Follower Startegy: This is the strategy of follower businesses - "follow the lead and eat the last". These businesses are absolutely not great inventions or innovations. What these businesses do is create the same business, product, price, and distribution policies as the leading business.
Market-Nicher Strategy: This is the strategy of businesses that do not want to compete in large markets, but want to become leaders in small markets - a segment of the market that they "create".
Clearly the competition between leader and challenger is a red battlefield. This is a chronic disease in some industries. There are always 2 or 3 companies fighting for leadership and challenge, for example Coca and Pepsi, Unilever and P&G, Nokia and Motorola. Honestly, being a true leader brings a huge competitive advantage to the leading company. In this position, businesses will have strengths when negotiating with manufacturers or distributors, reducing costs thanks to the economics of scale, is remembered and thought of first by customers... But to occupy and keep this position, many businesses have had to "shed blood". In order to gain 1 or 2 more % market shares, or compete for reputation, leaders and challengers have to spend extremely high marginal costs and thus greatly reduce profits, sometimes having to sacrifice their potential. future development potential. Even though a follower is not directly competing, if they sell the same product, the same type of product as the two big guys, the follower cannot enjoy high profits. Speaking in the language of blue ocean strategy, this is not a blue strategy, nor really red, but a strategy of a follower in the war.
Thus, the remaining companies pursuing niche markets can be considered blue ocean strategies. It is clear that if these companies choose segments and niche markets that are large enough and profitable enough and monopolize them in the early stages, then these companies will be the ones creating blue oceans.
Businesses - leading, challenging, following, if boldly "let go", think more creatively and find a potential niche market to gradually move from competing in the main market to specializing in the market. This new product and developing it larger are also blue ocean competition strategies.
Blue Ocean Strategy from the perspective of Michael Porter - The World's Leading Strategist
According to Michael Porter, businesses will create competitive advantage by choosing one of the following strategies:
Cost Leadership: Compete by creating products or services with the lowest possible product prices and related costs. Then businesses can sell large quantities of goods at average prices and create large profits.
Differentiation: compete by creating a gap that makes it difficult for other businesses to compete. This difference can be product quality, delivery time, brand awareness, and widespread distribution system.
Concentration: Compete by focusing resources and strength on one product, one segment or a special customer group.
Because Michael Porter emphasized that if a business does not choose one of the above strategies, it will not have a competitive advantage, the authors of blue ocean strategy criticize that they - Michael Porter's competitive strategies - do not enough to create blue oceans. However, in my opinion, Michale Porter absolutely does not restrict businesses from pursuing and implementing only one competitive strategy. Businesses can absolutely pursue and successfully implement 2 of the 3 above strategies at the same time. For example, low price/cost and differentiation, low price/cost and focus. Then, it is clear that the business will create a blue ocean strategy.
Instead of conclusion:
The author raises the above issue not to criticize the blue ocean strategy but on the contrary to contribute to strengthening it. Through just four leading management writers, we have seen the importance of competing smartly, that is, not competing. Especially in this era, businesses must always work with higher productivity than before and with tireless creativity to be able to sail their business boat on the next "blue" oceans. concatenate.
Lam Minh Chanh, MBA
